Synlait Returns to Profitability in HY25

About Synlait Milk Limited

Synlait Milk Limited (ASX: SM1) is a dairy company based in New Zealand that specialises in producing infant formula, dairy ingredients, and consumer dairy products. Apart from making different products for customers, the company also focuses on sustainable development by utilising leads with PrideTM and customised greenhouse gas tools to support and incentivise our farmers to reduce GHG on farms. Synlait Milk Limited was listed on ASX on 25 November 2016 at an issue price of AUD 3.18 per share.

Financial Performance

Synlait delivered a significantly improved financial performance for the 1H25. Total group revenue rose 16% YoY to NZD 916.8 million, supported by volume growth in key product categories and more substantial pricing in global dairy markets. The company achieved earnings before interest, tax, depreciation and amortisation of 63.1 million dollars, more than triple in the same period last year. Adjusted earnings before interest, tax, depreciation and amortisation, which excludes one-off items such as dispute provisions and contract costs, came in at 68.5 million dollars. Net profit after tax reached 4.8 million dollars, marking a return to profitability after a 96.2 million loss in the prior corresponding period.

Strategic Development

Synlait has made considerable progress over the past 12 months. The company was under financial stress a year ago, with deteriorating margins, supplier dissatisfaction, and high debt levels. In HY25, Synlait’s return to profitability was driven by a strategic realignment and focus on fundamentals.

A key move was the October 2024 equity placement, which raised NZD 212.1 million from cornerstone shareholders Bright Dairy and The a2 Milk Company. The capital raise helped reduce net debt to NZD 391.9 million, down from NZD 550.7 million, stabilising the balance sheet.

CEO Richard Wyeth, who joins in May 2025, is expected to continue the momentum and drive long-term growth. In the meantime, the acting executive team has sharpened its focus on rebuilding farmer trust, enhancing operational performance, and expanding customer relationships, particularly in Asia-Pacific markets.

Growth Pipeline and Opportunities

Synlait invests in long-term growth through product innovation, capacity expansion, and market development. The Nutrabase product line, a base powder for infant formula, has entered commercial sales, and more tailored offerings are in the trial stages for H2 FY25. In the Advanced Nutrition space, Synlait is also exploring non-dairy hybrid products, driven by changing consumer preferences across Asia-Pacific markets.

In Foodservice, the company is expanding its footprint in China and Southeast Asia and has recently entered the Hong Kong market via a new partnership. A notable success story is Synlait’s UHT cream product, which has gained popularity in China through a partnership with Alibaba-owned HEMA. The Dairyworks consumer brand continues to perform well, with strong sales growth in New Zealand and Australia. Synlait is also introducing 14 new Dairyworks-branded products in Vietnam, supported by a distribution agreement with the Annam Group.

Industry Context

Synlait operates in a competitive and evolving dairy landscape. While global dairy prices remain volatile, the company has captured premium segments through value-added offerings. Synlait processes around 4% of New Zealand’s milk supply, contributing 6% of the country’s dairy export earnings. The company has worked to strengthen farmer relationships by offering secured milk premiums through FY28 alongside competitive base milk prices. The current forecast base milk price for FY25 is NZD 10.00 per kgMS.

The number of farmers reversing their supply cease notices is growing, a positive signal for future milk availability. Due to its improved on-farm offering, Synlait anticipates recruiting new farmer suppliers in the upcoming seasons.

Looking ahead, Synlait expects full-year FY25 EBITDA to continue improving, although the second half is expected to grow more modestly compared to HY25 due to margin risks and foreign exchange exposure.